The rand broke a three-day winning streak on Wednesday as investors kept a close eye on the local election.
South Africans voted in a critical election that could steer the country into the unpredictable waters of coalition governance with opinion polls indicating that the ANC might lose its majority.
The ANC has been steadily losing its support nationally amid widespread discontent over corruption, poor delivery of basic services and a stagnant economy that has led to one of the world’s worst unemployment rates.
The local currency, which touched an intraday high of R18.2202/$, has been supported by optimism that the ANC could gain enough votes to form a coalition with other smaller parties that investors deemed as “market-friendly”.
However, analysts have cautioned the local currency could experience some volatility as elections and vote counting get under way.
“We should have a clearer picture on Friday, with 90% of the votes counted, while final results should be released over the weekend which could trigger further volatility in the rand,” said RMB head of forex execution Matete Thulare.
At 5.15pm, the rand had weakened 0.62% to R18.3978/$, 0.34% to R19.8981/€ and 0.31% to R23.3965/£. The euro was 0.37% weaker at $1.0814.
With the JSE closed on the day, global markets were weaker as investors watched the rise in US treasury yields move higher for a second day this week.
US bond yields are hovering around the highest level in about four weeks after a weak government bond auction on Tuesday, as well as waning rate-cut hopes amid the latest inflation data. In addition, hawkish comments from the Federal Reserve officials have solidified higher-for-longer bets, reported Bloomberg.
On Friday, investors will get fresh insights on the direction of US inflation and interest rates when the personal consumption expenditure (PCE) index, the Fed’s preferred inflation metric, is released.
Markets are broadly expecting the data to be in line with the previous month at 2.7%.
At 5.25pm, the Dow Jones industrial average was 0.96% weaker at 38,477 points, with markets also weaker in Europe.
Gold lost 0.82% to $2,340.48/oz, while platinum fell 2.22% to $1,047.60/oz. Brent crude was 1.03% weaker at $83.78 a barrel.
With Thando Maeko
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